An offshore merchant account is a business account that is opened in a country different from the location where the business owner is living. These types of accounts are opened for a variety of reasons including privacy, tax advantages and competitive interest rates.
It is no secret that many companies choose to conduct their business offshore as a way to save on taxes, however not all companies will open offshore merchant accounts for this reason.
Offshore merchant accounts are not as common as other types of business merchant accounts, however they appear more frequently than one might think. Offshore merchant accounts are typically set up in the pharmaceutical, gambling and pornography industries but also in the ticket entertainment, retail and travel industries.
Offshore merchant accounts are usually considered high risk due to the nature of the business they are used for. It is for this reason that the application process to open an offshore merchant account is more complicated and can also take longer to approve than usual.
If your company sells antique items, entertainment tickets to world events or if you are in the travel industry, opening an offshore merchant account makes sense. Being able to accept many forms of payment is a successful and effective way for you to reach out to the global population and extend your business.
Owning and operating an offshore merchant account is perfectly legal, however if you own one of these accounts you must report any interest you have earned from them.
A reputable offshore merchant provider will ensure its clients have full technical support, multi-currency processing, and the ability to accept all major credit cards, debit cards and check cashing abilities. They will also secure their customers with a simple integration process and implement advanced fraud preventions. As with most merchant providers, receiving regular account reporting to track your company fees and deposits is part of a reliable system.
Please consider the following notes before opening an offshore merchant account. There are more restrictions to open an offshore merchant account than with any other type of merchant account. For instance, most offshore merchant providers require that a company be in business for a certain length of time, generally two years, and makes a minimum of $10,000 US dollars per month.
Offshore merchant providers also insist that the website connected to an offshore account shows the prices of all merchandise, clearly display its refund, security and privacy policies as well as full contact information and shipping preferences.
Deposits into these accounts are also not as simple as they appear with other types of merchant account. Offshore account providers typically withhold deposits for several months at a time to prevent losses due to unexpected circumstances such as charge-backs. There are also higher set up and processing fees as well as administration and monthly maintenance fees compared to other types of merchant account. As with all merchant providers, it is best to check with several companies to ensure the needs of your business are looked after.